3 Questions
What is the difference between a draft invoice and an open invoice?
A draft invoice is editable and remains unsent, while an open invoice has been sent to a customer and is awaiting payment.
What is the purpose of voiding an invoice?
Voiding an invoice is conceptually similar to deleting (canceling) it.
How can marking an invoice as uncollectible help with tracking information?
Marking an invoice as uncollectible can help track the amount owed for reporting purposes.
Study Notes
- An invoice moves through different statuses from the time it’s created to when it’s paid.
- Draft invoices are still editable and remain unsent.
- Invoices move from an open to paid status when they’re paid.
- Paid invoices are terminal and can never take on another status.
- Voided invoices are conceptually similar to deleting (canceling) them.
- Uncollectible invoices are sometimes created when a customer won’t be able to pay their outstanding bill.
- You can mark an invoice as uncollectible to track the amount owed for reporting purposes.
Test your knowledge on the lifecycle of an invoice, from creation to payment and different status changes like draft, open, paid, voided, and uncollectible. Understand the significance of each status and their impact on financial reporting.
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